"Without new measures to combat corruption, we doubt that this currency reform will have lasting benefits."

Demonetisation is "by far the most sweeping change in currency policy that has occurred anywhere in the world in decades," writes Lawrence Summers, Charles W. Eliot Professor and President Emeritus at Harvard University, and Natasha Sarin, a Ph.D. candidate at Harvard.

But then Sarin and Summers note that demonetisation is not targeting the biggest fortunes, and that corruption is likely to continue with different arrangements.

"We strongly suspect that those with the largest amount of ill-gotten gain do not hold their wealth in cash but instead have long since converted it into foreign exchange, gold, bitcoin or some other store of value. So it is petty fortunes, not the hugest and most problematic ones, that are being targeted," they write.

Without new measures to combat corruption, we doubt that this currency reform will have lasting benefits. Corruption will continue albeit with slightly different arrangements.

Sarin and Summers write that the costs exceed the benefits. "We were not enthusiastic previously about the idea of withdrawing existing notes from circulation because we judged the costs to exceed the benefits. The ongoing chaos in India and the resulting loss of trust in government fortify us in this judgement," they write.

Sarin and Summers also write what is corrupt in India is highly debatable. "Most free societies would rather let several criminals go free than convict an innocent man. In the same way, for the government to expropriate from even a few innocent victims who, for one reason or another, do not manage to convert their money is highly problematic. Moreover, the definition of what is illegal or corrupt is open to debate given commercial practices that have prevailed in India for a long time," they write.